Saturday, April 29, 2006

Turks, Kurds Keep Ties Businesslike in New Iraq

SULAYMANIYA, Iraq — As they attempt to secure their hold on a semi-independent slice of Iraq and rebuild its economy, Kurdish leaders have turned in a surprising direction — toward Turkey.

For much of the last century, Turks and Kurds have been bitter enemies. Starting in the 1930s, Turkey banned the language of its Kurdish minority and violently suppressed Kurdish independence movements on its soil. Just in recent weeks, Turkish security forces and Kurdish protesters clashed in riots that claimed more than a dozen lives.

Across the border, the Turkish government has opposed Kurdish moves toward self-rule in Iraq's three northern provinces. And Turkish leaders have accused the Kurds of harboring bases for militant groups that have attacked civilians and military targets in Turkey.

But today, Kurdish leaders are seeking investment from Turkish firms. To date, 314 Turkish companies have signed contracts for projects valued at more than $1 billion, officials of Iraqi Kurdistan have said.

Visitors to Kurdistan can fly into one of two airports built by companies based in Turkey, drive Turkish-built roads and see Turkish-built housing developments and university buildings.

"Turkish companies are everywhere in Kurdistan and doing everything," said Ilnur Cevik, a Turkish businessman whose Cevik Ler company claims more than $100 million in Kurdish government construction contracts.

"Soon my company will be generating electricity in collaboration with the Kurdistan government," he said.

The influx of Turkish companies is part of a policy to thaw relations with its wary neighbor, Kurdish officials say.

"We really have been flooded with Turkish companies," said Safeen Dizayee, a leading member of the Kurdish Democratic Party, which controls western Kurdistan. "This is healthy because it helps to develop good international relations. Naturally if Turkey, or any other country, has a vested interest here, their politicians are going to be obliged to be flexible."

The investment also carries benefits, both economic and political, for Turkey. Before the U.S.-led invasion of Iraq in 2003, officials in Ankara, the Turkish capital, had complained that United Nations sanctions on Iraq had cost Turkey $60 billion in lost revenue.

In Iraqi Kurdistan, some Turkish leaders see a chance to renew a large, nearby market, which could strengthen their own nation's economy.

"Northern Iraq is an especially lucrative market because it is the most stable part of Iraq and because it borders Turkey," said legislator Reha Denemec, a member of the ruling Justice and Development Party.

"Turkish companies are lining up to do business there, especially in construction. So much Turkish cement is going there that this has driven up cement prices in Turkey," he said.

On the political side, "the trade is crucial because it helps us deal with our terror problem in the southeast of the country," added Denemec, referring to Kurdish separatist groups within Turkey.

The Kurds' struggle in Turkey is part of their aspirations for statehood throughout the region. Twenty million Kurds — considered the world's largest ethnic group without a political homeland — live, often uneasily, in Syria and Iran as well as Iraq and Turkey.

Iraqi Kurds were subject to brutality and inferior status under Saddam Hussein and eagerly supported the invasion to depose him. The autonomy and relative tranquillity they enjoy in northern Iraq is the fruit of that alliance with the United States.

Yet many Western firms still shy away from the region because of concerns about violence and political interference with contracts. To some extent then, Iraq's Kurds are inviting Turkish companies out of necessity.

"Many international institutions consider the risk in Irbil [the capital of Kurdistan] to be the same as the rest of Iraq," said Douglas Mellor, an American living in Britain who advises the Kurdish government.

Global companies such as Coca-Cola Co. have thus far declined to risk sending executives into any part of Iraq, Mellor said.

"The British Petroleums and the Shells of the world are very interested in Iraq, but because they are [publicly traded] companies with large boards of directors, a lot of them are just kind of hovering around. They're interested, but quite often their executives can't even fly into Iraq."

Regionally based firms, with more knowledge of Kurdistan and its influential people, have been better able to exploit opportunities here. Turkish firms, along with companies from Lebanon, Jordan, the United Arab Emirates and to a lesser extent, Iran, have launched an unprecedented building boom in Kurdistan.

"Until 1991, there were about 200 or so public projects over the past 120 years," said Dizayee, the KDP official. "Since then, there have been about 1,200 projects."

Some Kurdish business owners complain that Kurdistan officials' strategy of luring Turkish firms has sidelined them and when they do land government contracts, they are forced to pay off top functionaries of Kurdistan's ruling parties — the Kurdish Democratic Party, which controls western Kurdistan, and the Patriotic Union of Kurdistan, which controls the east.

An owner of a construction business in Irbil said he rarely won large contracts because the government puts so few out to public bid. And when he did win a significant deal, it required taking a prominent party official as a partner.

"I shared some of my profits because I was obliged to do so," said the businessman, who asked not to be named for fear of reprisal. "They are like snakes. If they know about any project, they're going to bite you."

Party influence on businesses has hindered economic growth and the quantity of goods available to Kurds. Cellphone users in Kurdistan, for example, generally go with one of two companies, both with party ties — Korek in the west or Asiacell in the east. Users of the two services can call international phone services but not each other.

Cevik, the Turkish owner of the Cevik Ler firm, said he owed his success to his long relationships with Massoud Barzani, head of the KDP and president of the regional government, and Jalal Talabani, the PUK leader and Iraq's head of state.

Cevik said that he met the two Kurdish leaders when he was an editor for a Turkish newspaper. Over the course of seven years they remained in contact — despite strong opposition in his home country.

"I was a liaison between the Turkish government and the Kurds. I was one of those activists in Turkey trying to build better relationships with the Kurds…. I think this is crucial — vital," he said in a telephone interview. "Some branded us as traitors in Turkey and tried to ruin us financially."

As U.S. warships massed in the Persian Gulf in 2003, Cevik sat down with Barzani and Talabani outside Irbil. It was a rare meeting between the two Kurdish rivals, who had fought each other in a civil war during the 1980s.

"Mr. Talabani and Mr. Barzani asked me to bring some reliable Turkish companies — they wanted handpicked companies — into Kurdistan," Cevik said. "We did a partnership with some of these companies."

Since that meeting, his company has become one of the leading businesses in Kurdistan, with government contracts that include building the $44-million Sulaymaniya airport and a $65-million dormitory project for Salahuddin University.

"I think the Kurds realize that with the uncertainty of the future in Iraq, they can't put all the eggs in one basket," Cevik said. "So they are trying to forge closer ties in Turkey."



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